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Energy drags Wall St lower; S&P set to drop for third week

Traders work on the floor of the New York Stock Exchange March 2, 2015. REUTERS/Brendan McDermid (UNITED STATES - Tags: BUSINESS)

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks slumped on Friday, putting the S&P 500 on track for its third straight weekly decline, as a robust dollar threatened to erode the profits of multinationals and tumbling crude oil prices pressured energy shares.

Crude oil (CLc1) fell 4 percent to $45.15 a barrel, extending its losses throughout the morning, after the International Energy Agency said a global oil glut continued to build and U.S. oil production showed no signs of slowing. The commodity has fallen in six of the past seven sessions and is down almost 60 percent from a peak reached in June.

The S&P energy index (.SPNY) fell 1.4 percent, among the biggest decliners of the 10 primary S&P 500 sectors. Chevron Corp (CVX.N) fell 1.4 percent to $101.03 while Noble Corp (NE.N) sank 5.3 percent to $13.46.

"It's a bit of a surprise that the U.S. continues to produce at such a high level, and that amount of oil surplus continues to push the commodity lower," said Michael Arone, chief investment strategist for State Street Global Advisors’ U.S. Intermediary Business in Boston.

"I don't expect oil will go much lower, but as it keeps falling, there are bigger concerns that we could see problems with respect to capital expenditures and employment in certain regions of the country."

U.S. consumer sentiment fell in March, dropping well below expectations, according to the University of Michigan's preliminary monthly reading. [ID:nEMNF3C0RY]

The U.S. dollar index (.DXY) rose 0.7 percent and was set for its fourth straight weekly rise. Investors see the continued strength in the greenback as a threat to multinational corporate profits. [ID:nL1N0WE2F1]

Investors were looking ahead to next week's Federal Reserve meeting, which could provide further insight into when the first rate increase will come.

FXCM Inc (FXCM.N) jumped 23 percent to $2.64 in heavy trading a day after fourth-quarter earnings beat expectations. This was the currency broker's first quarterly report since the removal of the cap on the Swiss franc sparked massive losses that pushed it to take a rescue loan.

Aeropostale Inc (ARO.N) slumped 16 percent to $3.12 after forecasting a wider quarterly loss than had been anticipated. [ID:nL4N0WE5TT]

Markets have been volatile this week, with the S&P posting both its biggest one-day gain since early February and its biggest one-day loss since early January. The Dow is on track for a weekly drop of 0.9 percent while the Nasdaq is on track for a drop of 1.4 percent. The S&P is down 1.2 percent on the week and is on track for its third straight weekly decline.

The Dow Jones industrial average (.DJI) fell 195.58 points, or 1.09 percent, to 17,699.64, the S&P 500 (.SPX) lost 18.4 points, or 0.89 percent, to 2,047.55 and the Nasdaq Composite (.IXIC) dropped 33.64 points, or 0.69 percent, to 4,859.66.

Declining issues outnumbered advancing ones on the NYSE by 2,313 to 573, for a 4.04-to-1 ratio; on the Nasdaq, 1,776 issues fell and 771 advanced for a 2.30-to-1 ratio favoring decliners.

The benchmark S&P 500 index was posting 21 new 52-week highs and 20 new lows; the Nasdaq Composite was recording 96 new highs and 67 new lows.

(Editing by Bernadette Baum and Nick Zieminski)